APL Apollo Q4 Results Review - Margins Contract Despite Higher Volumes, Favourable Realisations: Systematix

Slower than expected capacity ramp-up and unfavorable demand for key structural steel products are key risks for the company.

A square and rectangular black hollow sections tubes made by APL Apollo Tubes Ltd. (Source: Company website)

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Systematix Research Report

APL Apollo Tubes Ltd.’s Q4 FY24 Ebitda (excluding other income) of Rs 2.8 billion (-15.6%/ +0.3% YoY/QoQ) was 4% below our estimate, as margins from value-added products came lower than expected.

APL Apollo reported revenue of Rs 47.6 billion (+7.6%/14.1% YoY/QoQ), 8% above our estimate on superior realisations. Adjusted profit after tax reported 679 kt in sales volume this quarter, clocking 4.5%/12.4% YoY/QoQ growth, with a blended realisation of Rs 70,188/tonne.

Realisation grew by 2.9%/1.5% YoY/QoQ despite a 7.7%/7.9% fall in HRC prices, respectively. Overall Ebitda/tonne in Q4 was Rs 4,132 versus our estimate of ~Rs 4,538, due to lower margins from key segments. Ebitda margin of rust-proof structures in the VAP segment fell continuously for the fifth consecutive quarter resulting in a sharp 33.6%/20.8% YoY/QoQ fall in Ebitda/tonne at Rs 4,865.

Margins in other VAP segments, including heavy, super-heavy, and light structures, also fell during the quarter. The share of general structures in the sales mix was 40%, where Ebitda/tonne fell by 31% YoY.

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Systematix APL Apollo Tubes -Q4 FY24.pdf
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Also Read: Jindal Steel Q4 Results Review - Beat On Top-Line Despite Margin Pressure: IDBI Capital

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